Mac Advisor

Summer 2017

Cancelling your card: Good idea or big mistake?

You’ve finally paid off that credit card balance that’s been hanging over your head for far too long. Your immediate urge may be to cancel the card. But, before you grab a scissors consider these facts and how it may affect your credit score.

Your average length of credit history may be lowered by closing an account.

Your average length of credit history may be lowered by closing an account. Part of your credit score is determined by how long you have been borrowing. If you close a credit account that you have had for years in favor of newer credit accounts, this average length of credit history will likely be shortened.

You may raise your debt to credit ratio.

One major factor in how lenders view your creditworthiness is the ratio of your balances on revolving accounts to your overall available credit. If you close a credit account, you reduce your overall available credit, likely causing your debt-to-credit ratio to rise.

Closing an account doesn’t undo any damage.

If you have any red marks related to your credit card — late payments, overspending, charge-offs — closing the card does not remove these from your credit records. Most negative entries will, however, fall off your report in seven years.

Consider whether your card has an annual fee.

If your credit card comes with an annual fee you may be able to call the credit company and have it waived. Otherwise, if you don’t want to pay annually for use of your card, cancel it.

Don’t assume a creditor will simply close your account if you stop using it.

Cutting up your card or stopping use does not automatically cancel your card.

If you’re looking for a new credit card with great low rates, contact Macatawa Bank at (877) 820-2265 or apply online at macatawabank.com/GetMyCard.

Bidding wars: The housing market awakens

With the economy on the upswing, the housing market has flipped from being a buyer’s market to a seller’s market. If you’re trying to buy a house, it’s a tough reality and can result in many competing bids for the same property. But there are ways you can give yourself an advantage and win that house you want to call home.

Know your area’s market. You might know the approximate value of the house you’re after, but what about the final sale prices of houses in the neighborhood? Were they above the asking price? How often? Your offer is more likely to succeed if it aligns with past sales in the neighborhood.

Be careful not to underbid. Today’s markets aren’t forgiving of lowball offers. If you bid low, you risk losing the house to someone who priced more reasonably. If you’re willing to pay up to a certain amount, go with that off the bat so you aren’t written off.

Put up more earnest money. You only make this deposit if your offer is accepted, so why not show you’re serious and place your payment above the standard 1 to 3 percent? It will help assure the buyer you are unlikely to back out of the deal.

Cover seller costs. Usually, the seller will pay transfer taxes and for the home warranty. Offer to cover these and other seller-associated costs.

Make an emotional appeal. Money matters, but connecting on an emotional level with the seller can be what makes the difference between you and another buyer. A simple way is to attach a letter and maybe a photo of your family with your offer. It can explain who you are, what your family is like and why you want to live there. Maybe you felt some special connection to a certain room or know your family and the sellers have similar interests.

Be flexible. Ask your agent to see if there’s any way you can make the process easier for the sellers. For example, if they need to move out immediately or can’t move for a few months, being flexible on your move-in date could make them more willing to accept your offer.

When the time comes to buy a house, turn to home finance experts at Macatawa Bank. Visit macatawabank.com/mortgage to find a mortgage that’s right for you.

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Did you know…

Your home’s equity can help you:

Pay down or consolidate your debt

Pay for college expenses

Fund your next vehicle purchase

Tackle a home improvement project

Call (877) 820-2265 to find out how much equity you have to put to good use.

Melt debt with the debt-snowball method

Are you the type of person who prefers to tackle smaller goals that lead up to accomplishing a larger goal? Do you have more than one credit card or loan to pay? Then you may embrace the debt-snowball repayment technique. It helps you melt debt by paying off your smallest balance first, then rolling the payment into paying off the next largest debt.

Here’s how to make the debt-snowball method work for you:

List your debts in order from smallest to largest balance. Just look at the amount owed, not the interest rate.

Budget to pay the minimum payment on every balance except the smallest one.

Determine how much extra above the minimum payment you can pay on the smallest balance, then pay this amount each month until the balance is paid off.

Roll the paid off debt’s payment amount to the second smallest debt’s payment.

Repeat until you pay the largest balance in full.

Although you may not pay debt with the highest interest rate first as some financial experts recommend, the debt-snowball method can motivate you to pay off debt faster when you see results sooner. If possible, add extra money to the payment amount with each new “snowball roll” — and heat up your path to being debt-free!

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Tip

When your last debt is paid, keep your snowball rolling by depositing the final debt repayment amount into your savings account at Macatawa Bank each month! Open your account easily at macatawabank.com/Open.

5 ways to save money at the pump

Gas prices getting you down? If you’re stuck filling your tank no matter the price, you can still soften the blow to your wallet by getting the most mileage possible out of the dollars you spend at the pump.

1

Use the lowest octane advised by your owner’s manual. Using a higher level than recommended provides no added benefit.

2

Empty your trunk. Carrying extra weight decreases fuel efficiency.

3

Combine trips. Taking separate trips from a cold start uses more gas than covering the same distance with a warm engine.

4

Drive smart. Fuel efficiency decreases at speeds above 60 miles per hour, and starting and stopping quickly uses more gas than driving smoothly.

5

Keep up on routine maintenance. Change your oil, keep tires inflated, replace air filters and tune your engine according to recommendations in your owner’s manual for the best fuel efficiency.

Of course the best cost savings often comes from alternative transportation. Biking, walking, using public transit or carpooling when possible can equal big savings over time — to your wallet and the environment.

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